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Commentary: NYSE can't afford to save American Stock Exchange

NEW YORK (MarketWatch) -- Massive job cuts at the American Stock Exchange represent a fitting, if sad, end to an institution that played second fiddle throughout its 17 decades.

NYSE Euronext
NYX, -0.52%
will cut as many as three-fourths, or about 285 of the Amex's 380 employees, following its $260 million acquisition of the options and equity exchange. Some of the remaining 260 to 280 employees may stay at the NYSE for three to 12 months after the deal closes, according to a report Monday in the Wall Street Journal. See full story.

The Amex has been on life support for the better part of a decade, and the NYSE -- in its own pitched battle with other exchanges on the global landscape -- can little afford to take on additional costs.

The Amex was the upstart rival to the NYSE in the late 1800s and early 1900s but, even as a second-place institution, it began to lose ground to the NYSE and up-and-comers such as the electronic Nasdaq Stock Market Inc.
NDAQ, -1.09%
A shift into options helped the Amex for a while. But new, technology savvy entrants into that area also nudged out the stodgy undercapitalized exchange.

By the early 2000s, the Amex was embroiled in trading scandals. Last year, the exchange and its ousted chief executive, Salvatore Soldano, were censured by the Securities and Exchange Commission. Throughout all this, the exchange again found a great new product in the exchange-traded-fund business and again faced competition.

A weary membership agreed to a generous buyout.

It's left to the NYSE to pick up the pieces -- and who can blame it for just keeping the funds with any value?

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